Merkel says won't hesitate to toughen Russia sanctions if needed

German Chancellor Angela Merkel said on Wednesday she would not hesitate to impose economic sanctions on Russia if the situation in Ukraine were further destabilised, urging President Vladimir Putin to help by using his influence on pro-Russian separatists.

"It is decisive that President Putin use his influence to get the separatists to refrain from violence and intimidation, hand over their weapons and stop the occupations," she said in a speech in parliament. "If this doesn't happen ... we won't shrink from imposing further sanctions."

Speaking before a summit of the Group of Seven leading powers in Brussels, she said the world had not yet done enough to regulate financial markets, including 'shadow banking' which she said would be on the agenda of a G20 summit in Brisbane.